UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.

 

FORM 10-Q

 

☒

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended September 30, 2022

 

 

 

 

 

☐

Transition Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from ________ to ________

 

 

 

Commission File No. 000-52828

 

Black Bird Biotech, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada

 

 98-0521119

(State or Other Jurisdiction of

Incorporation or Organization)

 

 (IRS Employer

Identification No.)

 

3505 Yucca Drive, Suite 104, Flower Mound, Texas 75028

(Address of Principal Executive Offices, Including Zip Code)

 

(833) 223-4204

(Registrant’s telephone number, including area code)

 

_____________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

 

Securities Registered under Section 12(b) of the Exchange Act: None

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒     No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

☐

Smaller reporting company

☒ 

Accelerated filer

☐

Emerging growth company

☒

Non-accelerated filer

☒

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐     No ☒

 

The number of shares outstanding of the registrant’s Common Stock, $.001 par value (being the only class of its common stock), is 250,904,667 as of November 14, 2022.

 

 
 

 

PART I—FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

 

Page

 

Consolidated Balance Sheets as of September 30, 2022 (unaudited), and December 31, 2021 (audited)

3

 

Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

4

 

Consolidated Statement of Changes in Stockholders’ Deficit (unaudited) for the Nine Months Ended September 30, 2022 and 2021

5

 

Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended September 30, 2022 and 2021

7

 

Notes to Unaudited Consolidated Financial Statements

8

 

 

 
2
 

 

BLACK BIRD BIOTECH, INC.

(formerly Digital Development Partners, Inc.)

Consolidated Balance Sheets

 

 

9/30/22

(unaudited)

 

 

12/31/21

(audited)

 

ASSETS

 

CURRENT ASSETS

 

 

 

 

 

 

Cash and cash equivalents

 

$66,176

 

 

$499,766

 

Other current assets

 

 

 

 

 

 

 

 

Inventory

 

 

90,180

 

 

 

74,463

 

Prepaid expenses

 

 

---

 

 

 

101,189

 

Accounts receivable

 

 

3,913

 

 

 

2,741

 

Total current assets

 

 

160,269

 

 

 

678,159

 

OTHER ASSETS

 

 

 

 

 

 

 

 

Deposit - asset purchase

 

 

---

 

 

 

---

 

Fixtures and equipment

 

 

8,245

 

 

 

11,601

 

Intangible asset

 

 

--

 

 

 

84,444

 

Total other assets

 

 

8,245

 

 

 

96,045

 

TOTAL ASSETS

 

$168,514

 

 

$774,204

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Other current liabilities

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$63,677

 

 

$35,973

 

Accrued interest payable

 

 

21,671

 

 

 

4,446

 

Due to related party

 

 

85,743

 

 

 

5,242

 

Third-party notes payable, net of loan fees of $47,873 and debt discount of $79,087 at September 30, 2022, and $0 and $166,667 at December 31, 2021, respectively

 

 

655,083

 

 

 

58,333

 

Total current liabilities

 

 

826,174

 

 

 

103,994

 

TOTAL LIABILITIES

 

 

826,174

 

 

 

103,994

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 50,000,000 shares authorized, 28,500 and -0- shares issued and outstanding at September 30, 2022, and December 31, 2021, respectively

 

$28

 

 

$---

 

Common stock, $0.001 par value, 750,000,000 shares authorized, 250,904,667 and 301,230,828 shares issued and outstanding at September 30, 2022, and December 31, 2021, respectively

 

 

250,904

 

 

 

301,230

 

Stockholder receivable

 

 

(1,000)

 

 

(1,000)

Additional paid-in capital

 

 

3,131,336

 

 

 

2,991,163

 

Retained earnings (accumulated deficit)

 

 

(4,038,928)

 

 

(2,621,183)

Total stockholders’ equity

 

 

(657,660)

 

 

670,210

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

 

$168,514

 

 

$774,204

 

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
3
 

 

BLACK BIRD BIOTECH, INC.

(formerly Digital Development Partners)

Consolidated Statements of Operations

 

 

 

For the Three Months

Ended September 30,

 

 

For the Nine Months

Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Sales

 

$25,739

 

 

$46,694

 

 

$70,484

 

 

$81,906

 

Cost of goods sold

 

 

12,359

 

 

 

39,608

 

 

 

38,984

 

 

 

63,239

 

Gross profit (loss)

 

 

13,380

 

 

 

7,086

 

 

 

31,500

 

 

 

18,667

 

Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting services

 

 

40,600

 

 

 

123,639

 

 

 

286,630

 

 

 

241,426

 

Website expense

 

 

901

 

 

 

1,427

 

 

 

4,358

 

 

 

11,355

 

Legal and professional services

 

 

5,397

 

 

 

5,099

 

 

 

12,597

 

 

 

48,872

 

Advertising and marketing

 

 

19,513

 

 

 

117

 

 

 

221,800

 

 

 

5,195

 

License fee

 

 

---

 

 

 

22,339

 

 

 

16,998

 

 

 

24,008

 

Rent

 

 

600

 

 

 

1,860

 

 

 

3,600

 

 

 

8,520

 

General and administrative

 

 

102,398

 

 

 

205,697

 

 

 

559,550

 

 

 

399,256

 

Total expenses

 

 

169,409

 

 

 

360,178

 

 

 

1,105,533

 

 

 

738,632

 

Net operating loss

 

 

(156,029)

 

 

(353,092)

 

 

(1,074,033)

 

 

(719,965)

Other expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization

 

 

(21,111)

 

 

(31,667)

 

 

(84,444)

 

 

(73,889)

Interest expense

 

 

(46,535)

 

 

(65,701)

 

 

(255,913)

 

 

(128,790)

Depreciation expense

 

 

(1,118)

 

 

(1,217)

 

 

(3,355)

 

 

(3,080)

Total other income (expense)

 

 

(68,764)

 

 

(98,585)

 

 

(343,712)

 

 

(205,759)

Profit (loss) before taxes

 

 

(224,793)

 

 

(451,677)

 

 

(1,417,745)

 

 

(925,724)

Income tax expense

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Net profit (loss)

 

 

(224,793)

 

$(451,677)

 

$(1,417,745)

 

$(925,724)

Net profit (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(-)

 

 

$

 (-)

 

 

$

 (-)

 

 

$

 (-)

 

Diluted

 

$

 (-)

 

 

$

 (-)

 

 

$

 (-)

 

 

$

 (-)

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

292,999,382

 

 

 

196,004,788

 

 

 

301,232,745

 

 

 

172,040,746

 

Diluted

 

 

335,129,995

 

 

 

214,223,263

 

 

 

372,484,608

 

 

 

194,444,103

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
4
 

 

BLACK BIRD BIOTECH, INC.

(formerly Digital Development Partners)

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the Nine Months Ended September 30, 2022 and 2021 (unaudited)

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Stockholder

Receivable

 

 

Additional

Paid-in

Capital

 

 

Retained

Earnings

(Accumulated

Deficit)

 

 

Total

 

Balance, December 31, 2021

 

 

-

 

 

 

-

 

 

 

301,230,828

 

 

$301,230

 

 

$(1,000)

 

$2,991,163

 

 

$(2,621,183)

 

$670,210

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(670,358)

 

 

(670,358)

Balance, March 31, 2022

 

 

-

 

 

 

-

 

 

 

301,230,828

 

 

 

301,230

 

 

 

(1,000)

 

 

2,991,163

 

 

 

(3,291,541)

 

 

(148)

Stock issued for services

 

 

-

 

 

 

-

 

 

 

2,300,000

 

 

 

2,300

 

 

 

-

 

 

 

32,200

 

 

 

-

 

 

 

34,500

 

Stock issued for debt cancellation

 

 

-

 

 

 

-

 

 

 

15,146,188

 

 

 

15,146

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,146

 

Warrants issued in conjunction with debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,051

 

 

 

-

 

 

 

78,051

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(522,594)

 

 

(522,594)

Balance, June 30, 2022

 

 

-

 

 

 

-

 

 

 

318,677,016

 

 

 

318,676

 

 

 

(1,000)

 

 

3,101,414

 

 

 

(3,814,135)

 

 

(395,045)

Common stock cancelled in exchange for preferred stock

 

 

28,500

 

 

 

28

 

 

 

(99,063,659)

 

 

(99,064)

 

 

-

 

 

 

99,036

 

 

 

-

 

 

 

-

Stock issued for debt cancellation

 

 

-

 

 

 

-

 

 

 

16,853,810

 

 

 

16,855

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

16,855

 

Stock issued for warrant exercise

 

 

-

 

 

 

-

 

 

 

5,062,500

 

 

 

5,062

 

 

 

-

 

 

 

(5,062)

 

 

-

 

 

 

-

 

Stock issued for warrant exercise

 

 

 

 

 

 

 

 

 

 

9,375,000

 

 

 

9,375

 

 

 

-

 

 

 

(9,375)

 

 

-

 

 

 

-

 

Reclassification of warrants issued in conjunction with debt in June 2022

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(70,117)

 

 

-

 

 

 

(70,117)

Warrants issued in conjunction with debt

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,440

 

 

 

-

 

 

 

15,440

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(224,793)

 

 

(224,793)

Balance, September 30, 2022

 

 

28,500

 

 

$28

 

 

 

250,904,667

 

 

$250,904

 

 

$(1,000)

 

$3,131,336

 

 

$(4,038,928)

 

$(657,600)

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
5
 

 

BLACK BIRD BIOTECH, INC.

(formerly Digital Development Partners)

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the Nine Months Ended September 30, 2022 and 2021 (unaudited)

(continued)

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Stockholder

Receivable

 

 

Additional

Paid-in

Capital

 

 

Retained

Earnings

(Accumulated

Deficit)

 

 

Total

 

Balance, December 31, 2020

 

 

-

 

 

$-

 

 

 

164,925,000

 

 

$164,925

 

 

$(10,000)

 

$703,353

 

 

$(839,669)

 

$27,609

 

Effect of adoption of ASU 2020-06

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(56,343)

 

 

29,788

 

 

 

(26,555)

Stock issued for cash

 

 

-

 

 

 

-

 

 

 

4,875,000

 

 

 

4,875

 

 

 

-

 

 

 

190,125

 

 

 

-

 

 

 

195,000

 

Stock issued for services

 

 

-

 

 

 

-

 

 

 

150,000

 

 

 

1,500

 

 

 

-

 

 

 

5,380

 

 

 

-

 

 

 

6,880

 

Stock issued for commitment fee

 

 

-

 

 

 

-

 

 

 

2,000,000

 

 

 

2,000

 

 

 

-

 

 

 

63,000

 

 

 

-

 

 

 

65,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(208,233)

 

 

(208,233)

Balance, March 31, 2021

 

 

-

 

 

 

-

 

 

 

171,950,000

 

 

 

171,950

 

 

 

(1,000)

 

 

906,865

 

 

 

(1,018,114)

 

 

59,701

 

Stock issued for cash

 

 

-

 

 

 

-

 

 

 

3,125,000

 

 

 

3,125

 

 

 

-

 

 

 

96,875

 

 

 

-

 

 

 

100,000

 

Stock issued for services

 

 

-

 

 

 

-

 

 

 

450,000

 

 

 

450

 

 

 

-

 

 

 

13,050

 

 

 

-

 

 

 

13,500

 

Stock issued for services

 

 

-

 

 

 

-

 

 

 

8,000,000

 

 

 

8,000

 

 

 

-

 

 

 

242,400

 

 

 

-

 

 

 

250,400

 

Stock issued for services

 

 

-

 

 

 

-

 

 

 

500,000

 

 

 

500

 

 

 

-

 

 

 

14,500

 

 

 

-

 

 

 

15,000

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(265,814)

 

 

(265,814)

Balance, June 30, 2021

 

 

-

 

 

 

-

 

 

 

184,025,000

 

 

 

184,025

 

 

 

(1,000)

 

 

1,273,690

 

 

 

(1,283,928)

 

 

172,787

 

Stock issued for cash (Reg A #1)

 

 

-

 

 

 

-

 

 

 

1,562,500

 

 

 

1,562

 

 

 

-

 

 

 

48,438

 

 

 

-

 

 

 

50,000

 

Stock issued for cash (Reg A #2)

 

 

-

 

 

 

-

 

 

 

51,700,000

 

 

 

51,700

 

 

 

-

 

 

 

723,800

 

 

 

-

 

 

 

775,500

 

Stock issued for debt conversion

 

 

-

 

 

 

-

 

 

 

8,607,995

 

 

 

8,608

 

 

 

-

 

 

 

93,002

 

 

 

-

 

 

 

101,610

 

Stock issued for services

 

 

-

 

 

 

-

 

 

 

1,002,000

 

 

 

1,002

 

 

 

-

 

 

 

38,076

 

 

 

-

 

 

 

39,078

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(451,677)

 

 

(451,677)

Balance, September 30, 2021

 

 

-

 

 

$-

 

 

 

246,897,495

 

 

$246,897

 

 

$(1,000)

 

$2,177,006

 

 

$(1,735,605)

 

$687,298

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
6
 

 

BLACK BIRD BIOTECH, INC.

(formerly Digital Development Partners)

Consolidated Statements of Cash Flows

(unaudited)

 

 

 

For the Nine Months

Ended September 30,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$(1,417,745)

 

$(925,724)

Adjustments to reconcile net loss to net cash used for operating activities:

 

 

 

 

 

 

 

 

Stock issued for services

 

 

34,500

 

 

 

119,650

 

Non-cash interest expense for stock conversion of debt

 

 

7,000

 

 

 

2,610

 

Amortization

 

 

84,444

 

 

 

73,889

 

Depreciation

 

 

3,356

 

 

 

3,080

 

Accounts receivable

 

 

(1,172)

 

 

(9,445)

Amortization of debt discount

 

 

212,834

 

 

 

40,954

 

Amortization of financing fees

 

 

18,047

 

 

 

65,639

 

Prepaid expense

 

 

101,189

 

 

 

35,380

 

Accrued interest

 

 

17,225

 

 

 

9,280

 

Inventory

 

 

(15,717)

 

 

(38,449)

Accrued expenses

 

 

37,708

 

 

 

(4,604)

 

 

 

 

 

 

 

 

 

Net cash used for operating activities

 

 

(918,331)

 

 

(627,740)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Machinery and equipment

 

 

-

 

 

 

-

 

Asset purchase

 

 

-

 

 

 

(180,000)

Purchase of furniture and equipment

 

 

-

 

 

 

(5,702)

Net cash used for investing activities

 

 

-

 

 

 

(185,702)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Financing fees paid

 

 

-

 

 

 

(16,750)

Proceeds from loan payable

 

 

735,340

 

 

 

727,500

 

Proceeds from issuance of common stock

 

 

-

 

 

 

1,120,500

 

Net advances from related party

 

 

70,501

 

 

 

807

 

Repayment of note payable

 

 

(321,100)

 

 

(251,474)

Net cash provided by financing activities

 

 

484,741

 

 

 

1,580,583

 

Net increase (decrease) in cash and cash equivalents

 

 

(433,590)

 

 

767,140

 

Cash and cash equivalents at beginning of period

 

 

499,766

 

 

 

52,974

 

Cash and cash equivalents at end of period

 

$66,176

 

 

$820,114

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

Common stock issued for debt

 

$25,000

 

 

$-

 

Common stock issued for commitment fee

 

$-

 

 

$65,000

 

Inventory contributed for capital

 

$-

 

 

$773

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

Income taxes paid

 

$-

 

 

$-

 

Interest paid

 

$-

 

 

$-

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 
7
 

 

BLACK BIRD BIOTECH, INC.

(formerly Digital Development Partners, Inc.)

Notes to Unaudited Consolidated Financial Statements

September 30, 2022

 

1. BASIS OF PRESENTATION AND NATURE OF OPERATIONS

 

Basis of Presentation

 

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required by GAAP for complete annual financial statement presentation.

 

These unaudited interim consolidated financial statements, as of September 30, 2022, and for the nine months ended September 30, 2022 and 2021, reflect all adjustments consisting of normal recurring adjustments, which, in the opinion of management, are necessary to fairly present the Company’s financial position and the results of its operations for the periods presented, in accordance with the accounting principles generally accepted in the United States of America. Operating results for the nine months ended September 30, 2022, are not necessarily indicative of the results to be expected for other interim periods or for the full year ending December 31, 2022. These unaudited interim financial statements should be read in conjunction with the financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities Exchange Commission.

 

Nature of Operations

 

The Company is the exclusive worldwide manufacturer and distributor for MiteXstreamTM, an EPA-certified plant-based biopesticide effective in the eradication of mites and other similar pests, including spider mites, that destroy crops, particularly cannabis, hops, coffee and house plants, as well as molds and mildew.

 

The Company also manufactures and sells, under its Grizzly Creek NaturalsTM brand name, CBD products, including CBD Oils, gummies and pet treats, as well as CBD-infused personal care products.

 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN

 

Going Concern

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The Company had a working capital deficit of $(665,905) at September 30, 2022. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s activities will necessitate significant uses of working capital beyond 2022. Additionally, the Company’s capital requirements will depend on many factors, including the success of the Company’s researching for new markets. The Company plans to continue financing its operations with cash received from financing activities, more specifically from related party loans.

 

While the Company strongly believes that its capital resources will be sufficient in the near term, there is no assurance that the Company’s activities will generate sufficient revenues to sustain its operations without additional capital or if additional capital is needed, that such funds, if available, will be obtainable on terms satisfactory to the Company. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue as a going concern.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

 

 
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Cash and Cash Equivalents and Restricted Cash

 

Cash and equivalents include investments with initial maturities of three months or less. The Company had no cash equivalents as of September 30, 2022, and December 31, 2021.

 

Income Taxes

 

The Company accounts for income taxes utilizing ASC 740, “Income Taxes”. ASC 740 requires the measurement of deferred tax assets for deductible temporary differences and operating loss carry forwards, and of deferred tax liabilities for taxable temporary differences. Measurement of current and deferred tax liabilities and assets is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not included in the measurement. The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns. The Company currently has substantial net operating loss carry forwards. The Company has recorded a 100% valuation allowance against net deferred tax assets due to uncertainty of their ultimate realization. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

 

Basic and Diluted Net Loss Per Share

 

Net loss per share is calculated in accordance with ASC 260, Earnings per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

 

There are potential dilutive securities as of September 30, 2022 and 2021.

 

Related Parties

 

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

Recent Accounting Pronouncements

 

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06-Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020.

 

The Company has early adopted ASU 2020-06 for the year beginning January 1, 2021.

 

Change in Accounting Principle

 

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06-Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020.

 

 
9
 

 

The Company has early adopted ASU 2020-06 for the year beginning January 1, 2021.

 

The Company will adopt the if-converted method for calculating EPS and the modified retrospective method as the transition method. The if-converted method assumes that the conversion of convertible securities occurs at the beginning of the reporting period and the modified retrospective recognizes the cumulative effect of the change as an adjustment to the beginning balance of retained earnings as of the date of adoption. Under the modified-retrospective method, no adjustment should be made to the comparative-period information including EPS.

 

During the nine months ended September 30, 2021, the cumulative effect of the changes on retained earnings is $29,788, additional paid-in-capital is $56,343 and notes payable is $26,555, as reflected in the accompanying financial statements. During the nine months ended September 30, 2021 the effect on EPS would be unchanged after the adoption of ASU 2020-06.

 

3. CORONAVIRUS PANDEMIC

 

During 2020 a strain of coronavirus (COVID-19) was reported worldwide resulting in decreased economic activity and closures of businesses which has adversely affected the broader global economy. The virus has continued to affect the economy through 2021. The Company is taking all necessary steps to keep its business premises in a safe environment and is constantly monitoring the impact of COVID-19. At this time, the extent to which COVID-19 will impact the economy and the Company is uncertain. Pandemics or other significant public heath events could have a material adverse effect on the Company and the results of its operations in the future.

 

4. CONCENTRATION OF CREDIT RISK

 

In the normal course of business the Company maintains cash with a Federally-insured financial institution. Individual account balance may occasionally exceed the Federally-insured limit of $250,000. The Company has not experienced and does not anticipate any losses as a result of any account balances exceeding the Federally-insured limits.

 

5. CONVERTIBLE PROMISSORY NOTES – THIRD PARTIES

 

Tri-Bridge Ventures LLC. In April 2020, the Company obtained a loan in the amount of $25,000 from Tri-Bridge Ventures LLC. In consideration of such loan, the Company issued a $25,000 face amount convertible promissory note (the “Tri-Bridge Note”) bearing interest at 10% per annum, with principal and interest due in January 2021. Tri-Bridge Note is convertible into shares of the Company’s common stock at the rate of one share for each $0.001 of debt converted anytime after August 30, 2020.

 

In May 2022, the Tri-Bridge Note #1 was partially repaid through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

15,146

 

 

$0.001

 

 

 

15,146,188

 

Total Converted: $15,146

 

 

 

 

 

 

Total Shares: 15,146,188

 

  

        In July 2022, the Tri-Bridge Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

9,854

 

 

$0.001

 

 

 

9,853,810

 

Total Converted: $9,854

 

 

 

 

 

 

Total Shares: 9,853,810

 

 

At September 30, 2022, and December 31, 2021, accrued interest on the Tri-Bridge Note was $-0- and $4,178, respectively.

 

EMA Financial, LLC. In December 2020, the Company obtained a loan from EMA Financial, LLC which netted us $50,000 in proceeds. In consideration of such loan, the Company issued a $58,600 face amount convertible promissory note (the “EMA Note”), with OID of $4,100, bearing interest at 10% per annum, with principal and interest due in September 2021. The Company had the right to repay the EMA Note at a premium ranging from 120% to 145% of the face amount. The EMA Note was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 60% of the market price of the Company’s common stock on the date of issuance of the EMA Note and the date of conversion, any time after June 15, 2021.

 

 
10
 

 

In June 2021, the EMA Note was repaid in full in the amount of $93,697.70, as follows: $58,600 in principal; $3,499.30 in interest; and $31,598.40 as a prepayment premium.

 

Power Up Lending Group Ltd. In January 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $52,000 in proceeds. In consideration of such loan, the Company issued a $55,500 face amount convertible promissory note (“Power Up Note #1”) bearing interest at 12% per annum, with principal and interest due in January 2022. The Company had the right to repay the Power Up Note #1 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #1 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #1 and the date of conversion, any time after July 14, 2021.

 

During July 2021, the Power Up Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

15,000

 

 

$0.0162

 

 

 

925,926

 

$

20,000

 

 

$0.0143

 

 

 

1,398,601

 

$

20,500

 

 

$0.0143

 

 

 

1,666,434

 

Total Converted: $55,500

 

 

 

 

 

 

Total Shares: 3,990,961

 

 

SE Holdings, LLC. In February 2021, the Company obtained a loan from SE Holdings LLC which netted the Company $106,000 in proceeds. In consideration of such loan, the Company issued a $121,000 face amount promissory note (the “SE Holdings Note”), with OID of $15,000, bearing interest at 9% per annum, with principal and interest payable in eight equal monthly payments of $15,125 beginning in July 2021. The Company had the right to repay the SE Holdings Note at any time. Should the Company have been in default on SE Holdings Note, the SE Holdings Note would have become convertible into shares of the Company’s common stock at a conversion price equal to the lesser of the lowest closing bid price of the Company’s commons stock for the trading day immediately preceding either (a) the delivery of a notice of default, (b) the delivery of a notice of conversion resulting from such default or (c) the issue date of the SE Holdings Note. In addition, the Company issued 2,000,000 shares of its common stock to SE Holdings as a commitment fee, which shares were valued at $0.065 with a 50% discount per share, or $65,000, in the aggregate.

 

Through September 2021, the Company had repaid $45,375 of the SE Holdings Note, in accordance with the terms of the SE Holdings Note. In October 2021, the remaining balance of the SE Holdings Note, $75,625, was repaid by the Company.

 

Power Up Lending Group Ltd. In February 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $43,500 in proceeds. In consideration of such loan, the Company issued a $43,500 face amount convertible promissory note (“Power Up Note #2”) bearing interest at 12% per annum, with principal and interest due in January 2022. The Company had the right to repay the Power Up Note #2 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #2 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #2 and the date of conversion, any time after August 17, 2021.

 

During August and September 2021, the Power Up Note #2 was repaid in full through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 
$

15,000

 

 

$0.0137

 

 

1,094,891

 
$

20,000

 

 

$0.0093

 

 

2,150,538

 
$

11,110

*

 

$0.0081

 

 

1,371,605

 

Total Converted: 46,110

 

 

 

 

 

 

Total Shares: 4,617,034

 

* This amount includes $2,610 of interest.

 

 

 

 

 

Power Up Lending Group Ltd. In April 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $68,750 in proceeds. In consideration of such loan, the Company issued a $68,750 face amount convertible promissory note (“Power Up Note #3”) bearing interest at 12% per annum, with principal and interest due in April 2022. The Company had the right to repay the Power Up Note #3 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #3 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #3 and the date of conversion, any time after October 22, 2021.

 

In September 2021, the Power Up Note #3 was repaid in full by the Company, as follows: $68,750.00 in principal, $27,500.00 in additional principal as a prepayment premium and $5,063.01 in interest, a total repayment amount of $101,313.01.

 

 
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Power Up Lending Group Ltd. In August 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $78,750 in proceeds. In consideration of such loan, the Company issued a $78,750 face amount convertible promissory note (“Power Up Note #4”) bearing interest at 12% per annum, with principal and interest due in August 2022. The Company had the right to repay the Power Up Note #4 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #4 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #4 and the date of conversion, any time after October 22, 2021.

 

In September 2021, the Power Up Note #4 was repaid in full by the Company, as follows: $78,750.00 in principal, $15,750.00 in additional principal as a prepayment premium and $5,393.84 in interest, a total repayment amount of $99,893.84.

 

FirstFire Global Opportunities Fund LLC. In September 2021, the Company obtained a loan from FirstFire Global Opportunities Fund LLC which netted the Company $125,000 in proceeds. In consideration of such loan, the Company issued a $250,000 face amount convertible promissory note (“FirstFire Note”), with OID of $125,000, due in September 2022. The Company had the right to repay the FirstFire Note at anytime, with a 20%, or $50,000, reduction in principal owed if repaid in full on or before November 30, 2021. The FirstFire Note was convertible into shares of the Company’s common stock at a conversion price equal to $0.015 per share, any time after December 1, 2021.

 

Prior to November 30, 2021, the FirstFire Note was repaid in full by the Company, in the amount of $200,000 (which included a $50,000 reduction in principal owed, due to the FirstFire Note’s being repaid in full on or before November 30, 2021).

 

Tiger Trout Capital Puerto Rico, LLC. In September 2021, the Company obtained a loan from Tiger Trout Capital Puerto Rico, LLC which netted the Company $250,000 in proceeds. In consideration of such loan, the Company issued a $500,000 face amount convertible promissory note (“Tiger Trout Note”), with OID of $250,000, with principal due in September 2022. The Company has the right to repay the Tiger Trout Note at anytime, with a 10%, or $50,000, reduction in principal owed if repaid in full on or before November 30, 2021. The Tiger Trout Note is convertible into shares of the Company’s common stock at a conversion price equal to $0.015 per share, any time after December 1, 2021.

 

During the nine months ended September 30, 2022, the Company repaid in full the remaining $200,000 balance of the Tiger Trout Note.

 

1800 Diagonal Lending LLC. In March 2022, the Company obtained a loan from Sixth Street Lending LLC, who later assigned the loan to an affiliated company, 1800 Diagonal Lending LLC, which netted the Company $200,000 in proceeds. In consideration of such loan, the Company issued a $228,200 face amount promissory note (the “1800 Diagonal Note #1”), with OID of $24,450 and a one-time interest charge of $25,102, with principal and interest payable in 10 equal monthly payments of $25,330.20 beginning in May 2022. The Company has the right to repay the 1800 Diagonal Note #1 at any time, without penalty. Should the Company become in default on the 1800 Diagonal Note #1, the 1800 Diagonal Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 75% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date.

 

As of September 30, 2022, the Company was current in its repayment obligations under the 1800 Diagonal Note #1 and the 1800 Diagonal Note #1 had a remaining balance of $126,651 at September 30, 2022.

 

Talos Victory Fund, LLC. In May 2002, the Company obtained a loan from Talos Victory Fund, LLC which netted the Company $107,780 in proceeds. In consideration of such loan, the Company issued a $135,000 face amount promissory note (the “Talos Note #1”), with OID of $13,500, commissions of $9,720 and legal fees of $4,000. The Talos Note #1 is due in May 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $0.005 per share, subject to a 4.99% equity blocker.

 

In August 2022, $7,000 in accrued interest on the Talos Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

7,000

 

 

$0.001

 

 

 

7,000,000

 

Total Converted: $7,000

 

 

 

 

 

 

Total Shares: 7,000,000

 

 

At September 30, 2022, the Talos Note #1 had a remaining balance of $135,000

 

Mast Hill Fund, L.P. In May 2022, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $200,000 in proceeds. In consideration of such loan, the Company issued a $250,000 face amount promissory note (the “Mast Hill Note #1”), with OID of $25,000, commissions of $18,000 and legal fees of $7,000. The Mast Hill Note #1 is due in May 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $0.005 per share, subject to a 4.99% equity blocker.

 

 
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At September 30, 2022, the Mast Hill Note #1 had a remaining balance of $250,000.

 

GS Capital Partners, LLC. In June 2022, we obtained a loan from GS Capital Partners, LLC which netted our company $63,650 in proceeds. In consideration of such loan, we issued a $70,000 face amount promissory note (the “GS Capital Note #1”), with OID of $6,500, a finder’s fee of $4,900 and legal fees of $3,000, with principal and interest payable in 10 equal monthly payments of $7,840 beginning in September 2022. The Company has the right to repay the GS Capital Note #1 at any time, without penalty. Should the Company become in default on the GS Capital Note #1, the GS Capital Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 70% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date.

 

As of September 30, 2022, the Company was current in its repayment obligations under the GS Capital Note #1 and the GS Capital Note #1 had a remaining balance of $70,560 at September 30, 2022.

 

Boot Capital, LLC. In August 2022, the Company obtained a loan from Boot Capital, LLC which netted the Company $56,000 in proceeds. In consideration of such loan, the Company issued a $61,600 face amount promissory note (the “Boot Capital Note #1”), with OID of $5,600, commissions of $3,360 and legal fees of $2,500. The Boot Capital Note #1 is due in August 2023 and is convertible into shares of the Company’s common stock at any time after 180 days of issuance at a conversion price at a 40% discount to the then-market price of the Company’s common stock, subject to a 4.99% equity blocker.

 

At September 30, 2022, the Boot Capital Note #1 had a remaining balance of $61,600.

 

Mast Hill Fund, L.P. In September 2022, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $130,500 in proceeds. In consideration of such loan, the Company issued a $145,000 face amount senior secured promissory note (the “Mast Hill Note #2”), with OID of $14,500, commissions of $10,440 and legal fees of $3,000. The Mast Hill Note #2 is due in September 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $0.0025 per share, subject to a 4.99% equity blocker.

 

At September 30, 2022, the Mast Hill Note #2 had a remaining balance of $145,000.

 

6. COMMON STOCK

 

Common Stock Issued for Debt Conversions

 

Nine Months Ended September 30, 2022

 

In May 2022, the Tri-Bridge Note #1 was partially repaid through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

15,146

 

 

$0.001

 

 

 

15,146,188

 

Total Converted: $15,146

 

 

 

 

 

 

Total Shares: 15,146,188

 

 

        In July 2022, the Tri-Bridge Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

9,854

 

 

$0.001

 

 

 

9,853,810

 

Total Converted: $9,854

 

 

 

 

 

 

Total Shares: 9,853,810

 

 

        In August 2022, $7,000 in accrued interest on the Talos Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

7,000

 

 

$0.001

 

 

 

7,000,000

 

Total Converted: $7,000

 

 

 

 

 

 

Total Shares: 7,000,000

 

 

 
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Common Stock Issued for Cash

 

Nine Months Ended September 30, 2022

 

During the nine months ended September 30, 2022, the Company did not issued shares of common stock for cash.

 

Nine Months Ended September 30, 2022

 

During the nine months ended September 30, 2021, the Company sold a total of 6,437,500 shares of its common stock for a total of $245,000, or an average of $0.038 per share, under its first Regulation A Offering (SEC File No. 024-11215). Also, during the nine months ended September 30, 2021, the Company sold a total of 51,700,000 shares of its common stock for a total of $775,500, or $0.015 per share, under its second Regulation A Offering (SEC File No. 024-11621).

 

Common Stock Issued for Services

 

Nine Months Ended September 30, 2022

 

In January 2022, the Company entered into a consulting agreement with a third party, pursuant to which it is obligated to issue $7,500 of its common stock for each month of the six-month term of such agreement. During the nine months ended September 30, 2022, the Company issued a total of 2,300,000 shares of its common stock pursuant to this agreement, which shares were valued at $34,500. At September 30, 2022, the Company was obligated to issue $22,500 in shares of its common stock pursuant to this agreement, which amount is included in the Company’s accounts payable at September 30, 2022.

 

In April 2022, the Company entered into an executive services agreement with its Executive Vice President, William J. LoBell, pursuant to which it is obligated to issue 1,000,000 shares of its common stock upon execution of such agreement, then 500,000 shares of its common stock on each of July 1, 2022, October 1, 2022, January 1, 2023, and April 1, 2023. At September 30, 2022, the Company was obligated to issue a total of 1,500,000 shares of its common stock pursuant to this agreement, the total value of which, $25,000, is included in the Company’s accounts payable at September 30, 2022.

 

Nine Months Ended September 30, 2021

 

In September 2021, the Company entered into a consulting agreement with a third party, pursuant to which it is obligated to issue $3,000 of its common stock for each month of the three-month term of such agreement, in arrears.

 

In July 2021, the Company entered into a consulting agreement with a third party, pursuant to which it is obligated to issue 167,000 shares of its common stock for each month of the six-month term of such agreement, a total of 1,002,000 shares, which shares were valued at $0.039 per share, or $39,078, in the aggregate.

 

In June 2021, the Company issued 500,000 shares of common stock to its Chief Financial Officer and Director, William E. Sluss, as a retention bonus, which shares were valued at $0.03 per share, or $15,000, in the aggregate.

 

In May 2021, the Company issued 8,000,000 shares of common stock to a third-party consultant pursuant to a consulting agreement, which shares were valued at $0.0313 per share, or $250,400, in the aggregate. The term of the consulting agreement expires in May 2022.

 

In April 2021, the Company issued 450,000 shares of common stock to a third-party consultant pursuant to a consulting agreement, which shares were valued at $0.03 per share, or $13,500, in the aggregate. The term of the consulting agreement expired in June 2021.

 

In February 2021, the Company issued 2,000,000 shares of its common stock to a third party as a commitment fee, which shares were valued at $0.065 with a 50% discount per share, or $65,000, in the aggregate.

 

Pursuant to a consulting agreement, in January, February and March 2021, the Company issued a total of 150,000 shares (50,000 shares each month) of its common stock to a third-party consultant, which shares were valued at $0.0406 per share ($2,030, in the aggregate), $0.0534 per share ($2,670, in the aggregate) and $0.0436 per share ($2,180, in the aggregate), respectively.

 

Common Stock Issued for Warrant Exercise

 

In August 2022, the Company issued 5,062,500 shares of common stock upon the exercise of a portion of the Talos Warrants. The exercise of the Talos Warrants was on a cashless basis.

 
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In August 2022, the Company issued 9,375,000 shares of common stock upon the exercise of a portion of the Mast Hill Fund Note #1 Warrants. The exercise of the Mast Hill Fund Note #1 Warrants was on a cashless basis.

 

Cancellation of Common Stock

 

In August 2022, pursuant to two Exchange Agreements, a total of 99,063,659 shares of common stock were cancelled and returned to the status of authorized and unissued in exchange for a total of 28,500 shares of Series A Preferred Stock. (See Note 7 Preferred Stock and Note 9. Securities Exchange Agreements).

 

7. PREFERRED STOCK

 

In August 2022, pursuant to two Exchange Agreements a total of 28,500 shares of Series A Preferred Stock were issued in exchange for a total of 99,063,659 shares of common stock, which shares of common stock were cancelled and returned to the status of authorized and unissued. (See Note 9. Securities Exchange Agreements and Note 12 Amendments to Articles of Incorporation).

 

8. WARRANTS

 

Talos Victory Fund, LLC. In connection with the Talos Note #1, we issued to Talos Victory Fund 7,593,750 cashless warrants (the “Talos Note #1 Warrants”) with an exercise price of $0.008 per share. In August 2022, the Company issued 5,062,500 shares of common stock upon the exercise of a portion of the Talos Note #1 Warrants. The exercise of the Talos Note #1 Warrants was on a cashless basis.

 

Mast Hill Fund, L.P. In connection with the Mast Hill Note #1, we issued to Mast Hill Fund 14,062,500 cashless warrants (the “Mast Hill Fund Note #1 Warrants”) with an exercise price of $0.008 per share. In August 2022, the Company issued 9,375,000 shares of common stock upon the exercise of a portion of the Mast Hill Fund Note #1 Warrants. The exercise of the Mast Hill Fund Note #1 Warrants was on a cashless basis.

 

Additionally, in connection with the Mast Hill Note #2, the company issued to Mast Hill Fund 40,000,000 cashless warrants (the “Mast Hill Fund Note #2 Warrants”) with an exercise price of $0.0055 per share. The relative fair value associated with the warrants is $13,368 and has been recorded as a debt discount and will be amortized over the life of the note.

 

GS Capital Partners, LLC. In connection with the GS Capital Note #1, we issued to GS Capital 4,000,000 cashless warrants (the “GS Capital Warrants”) with an exercise price of $0.008 per share. The relative fair value associated with the warrants is $4,449 and has been recorded as a debt discount and will be amortized over the life of the note.

 

J.H. Darbie & Co. As a placement agent fee in connection with the Talos Note #1, in May 2022, the Company issued to J.H. Darbie & Co. (“Darbie”) 1,215,000 cashless warrants (the “Darbie Placement #1 Warrants”) with an exercise price of $0.008 per share.

 

As a placement agent fee in connection with the Mast Hill Note #1, in May 2022, the Company issued to Darbie 2,250,000 cashless warrants (the “Darbie Placement #2 Warrants”) with an exercise price of $0.008 per share. The relative fair value associated with the warrants is $3,485 and has been recorded as a debt discount and will be amortized over the life of the note.

 

As a placement agent fee in connection with the Mast Hill Note #2, in September 2022, the Company issued to Darbie 2,130,613 cashless warrants (the “Darbie Placement #3 Warrants”) with an exercise price of $0.0049 per share. The relative fair value associated with the warrants is $2,072 and has been recorded as a debt discount and will be amortized over the life of the note.

 

9. SECURITIES EXCHANGE AGREEMENTS

 

In August 2022, the Company entered into six separate securities exchange agreements (collectively, the “Exchange Agreements”) with its officers and directors: (a) Fabian G. Deneault (the “Deneault Agreement”), President and a Director of the Company, (b) Newlan & Newlan, Ltd. (the “Newlan Agreement”), a law firm owned by Eric Newlan, Vice President, Secretary and a Director of the Company, and L. A Newlan, Jr., a Director of the Company, (c) William E. Sluss (the “Sluss Agreement”), Chief Financial Officer and a Director of the Company, (d) EFT Holdings, Inc. (the “EFT Holdings Agreement”), a company controlled by Jack Jie Qin, a Director of the Company, (e) EF2T, Inc. (the “EF2T Agreement”), a company owned by Mr. Qin, and (f) Astoria LLC (the “Astoria Agreement”), a company controlled by Mr. Qin.

 

 
15
 

 

Pursuant to the Exchange Agreements, the Company is to issue a total of 42,000 shares of its Series A Preferred Stock, in exchange for a total of 123,972,996 shares of its common stock, as follows:

 

Exchange Agreement

 

 

Number of Shares

of Common Stock

to be Exchanged

 

 

Number of Shares of

Series A Preferred Stock

to be Issued

Deneault Agreement

 

 

49,746,253 shares

 

 

14,250 shares

 

Newlan Agreement

 

 

49,317,406 shares

 

 

14,250 shares

 

Sluss Agreement

 

 

1,615,002 shares

 

 

1,000 shares

 

EFT Holdings Agreement

 

 

18,221,906 shares

 

 

9,778 shares

 

EF2T Agreement

 

 

2,240,768 shares

 

 

1,202 shares

 

Astonia Agreement

 

 

2,831,661 shares

 

 

1,520 shares

 

 

123,972,996 shares

 

42,000 shares

 

As of September 30, 2022, the Deneault Agreement and the Newlan Agreement had been completed, such that a total of 28,500 shares of Series A Preferred Stock had been issued in exchange for a total of 99,063,659 shares of common stock, which shares of common stock were cancelled and returned to the status of authorized and unissued.

 

10. RELATED PARTY TRANSACTIONS

 

Common Stock Issued for Services

 

In April 2022, the Company entered into an executive services agreement with its Executive Vice President, William J. LoBell, pursuant to which it is obligated to issue 1,000,000 shares of its common stock upon execution of such agreement, then 500,000 shares of its common stock on each of July 1, 2022, October 1, 2022, January 1, 2023, and April 1, 2023. At September 30, 2022, the Company was obligated to issue a total of 1,500,000 shares of its common stock pursuant to this agreement, the total value of which, $34,500, is included in the Company’s accounts payable at September 30, 2022.

 

Advances from Related Parties

 

Nine Months Ended September 30, 2022

 

During the nine months ended September 30, 2022, the Company obtained $70,500 in advances from Touchstone Enviro Solutions, Inc. (“Touchstone”), a company owned by three of the Company’s officers and directors, Fabian G. Deneault, L. A. Newlan, Jr. and Eric Newlan. The funds were used to make payment on the 1800 Diagonal Note #1 and for working capital. Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2022, the Company owed Touchstone $70,500.

 

During the nine months ended September 30, 2022, the Company obtained an advance from its President, Fabian G. Deneault, in the amount of $10,000. The funds were used for marketing expenses. Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2022, the Company owed Mr. Deneault $10,000.

 

At September 30, 2022, the Company owed Atonia LLC $4,470 in principal and EF2T, Inc. $773.

 

Nine Months Ended September 30, 2021

 

During the nine months ended September 30, 2021, the Company obtained an advance from one of its officers and directors, Eric Newlan, as follows:

 

In June 2021, Mr. Newlan advanced the sum of $93,732.70 to the Company. The funds were used to repay the EMA Financial Note (the total repayment amount was $93,697.70: $61,119.80 in principal; $3,499.30 in interest; and $29,078.60 as a prepayment premium). Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2021, such loan had been repaid in full.

 

At September 30, 2021, the Company owed Atonia LLC $4,470 in principal and EF2T, Inc. $773.

 

Stock Issued for Bonus

 

In June 2021, the Company issued 500,000 shares of common stock to its Chief Financial Officer and Director, William E. Sluss, as a retention bonus, which shares were valued at $.03 per share, or $15,000, in the aggregate.

 

 
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New Mitexstream Agreement

 

In February 2021, Black Bird entered into a Manufacturing, Sales and Distribution License Agreement (the “New MiteXstream Agreement”) with a related party, Touchstone Enviro Solutions, Inc., which replaced a prior similar agreement (the “Original MiteXstream Agreement”) and served to expand Black Bird’s rights with respect to MiteXstream, an EPA-registered biopesticide. The New MiteXstream Agreement contains the following important provisions as compared to the Original MiteXstream Agreement:

 

 

 

New MiteXstream Agreement

 

Original MiteXstream Agreement

Term

 

December 31, 2080

 

Initial terms of 10 years, with one 10-year renewal term

Territory

 

Worldwide Exclusive (1)

 

United States and Canada

Royalty

 

$10.00 per gallon manufactured

 

Effective royalty of an estimated $50 per gallon

Minimums

 

2,500 gallons of concentrate manufactured per year (2)

 

$20,000 of product per year

Sublicensing

 

Right to sublicense granted

 

No right to sublicense

Trademarks

 

For no extra consideration, rights granted to use “MiteXstream” and “Harnessing the Power of Water”

 

For no extra consideration, rights granted to use “MiteXstream”

 

 

 

 

 

(1)

(2)

Exclusivity ends and becomes non-exclusive, if the minimum of 2,500 gallons per year is not met.

The minimum (2,500 gallons per year) is deemed to have been satisfied through December 31, 2022.

 

The disinterested Directors of the Company approved the New MiteXstream Agreement.

 

Facility Lease

 

In May 2020, a Company subsidiary, Black Bird Potentials, Inc. (“BBPotentials”), entered into a facility lease with Grizzly Creek Farms, LLC, an entity owned by one of the Company’s directors, Fabian G. Deneault, with respect to approximately 2,000 square feet of manufacturing space located in Ronan, Montana. Monthly rent under such lease was $1,500 and the initial term of such lease expired in December 2025. This lease was terminated effective April 1, 2021. Since such date, Mr. Deneault permits BB Potentials to utilize the leased facility for storage, at no charge.

 

11. LOANS PAYABLE – RELATED PARTIES

 

Nine Months Ended September 30, 2022

 

During the nine months ended September 30, 2022, the Company obtained no loans from related parties.

 

Nine Months Ended September 30, 2021

 

During the nine months ended September 30, 2021, the Company obtained an advance from one of its officers and directors, Eric Newlan, as follows:

 

In June 2021, Mr. Newlan advanced the sum of $93,732.70 to the Company. The funds were used to repay the EMA Financial Note (the total repayment amount was $93,697.70: $61,119.80 in principal; $3,499.30 in interest; and $29,078.60 as a prepayment premium). Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2021, such loan had been in full.

 

At September 30, 2021, the Company owed Atonia LLC $4,470 in principal and EF2T, Inc. $773.

 

12. AMENDMENTS OF ARTICLES OF INCORPORATION

 

Certificates of Amendment

 

In January 2020, the Company amended its Articles of Incorporation to change its corporate name to “Black Bird Potentials Inc.” and submitted such filing to FINRA for approval thereof. FINRA did not approve such filing, due to an extended passage of time from the Company’s initial filing and its being late in filing certain periodic reports.

 

In April 2021, the Company amended its Articles of Incorporation to change its corporate name to “Black Bird Biotech, Inc.”

 

 
17
 

 

In February 2021, the Company amended its Articles of Incorporation to increase the number of authorized shares of its common stock to 325,000,000.

 

In April 2022, the Company amended its Articles of Incorporation to increase the number of authorized shares of common stock to 750,000,000 and to authorize 50,000,000 shares of preferred stock.

 

Certificate of Designation – Series A Preferred Stock

 

In August 2022, the Company filed with the State of Nevada a Certificate of Designation (the “Certificate of Designation”), which established a Series A Preferred Stock with the following rights, preferences, powers, restrictions and limitations:

 

Designation, Amount and Par Value. The series of Preferred Stock shall be designated as Series A Preferred Stock and the number of shares so designated shall be Forty-Two Thousand (42,000). Each share of the Series A Preferred Stock shall have a par value of $0.001.

 

Fractional Shares. The Series A Preferred Stock may be issued in fractional shares.

 

Voting Rights. The holders of the Series A Preferred Stock shall, as a class, have rights in all matters requiring shareholder approval to a number of votes equal to two (2) times the sum of:

 

(a)

The total number of shares of common stock which are issued and outstanding at the time of any election or vote by the shareholders; plus

 

 

(b)

The number of votes allocated to shares of Preferred Stock issued and outstanding of any other class that shall have voting rights.

 

Dividends. The Series A Preferred Stock shall be treated pari passu with the Company’s common stock, except that the dividend on each share of Series A Preferred Stock shall be equal to the amount of the dividend declared and paid on each share of the Company’s common stock multiplied by the Conversion Rate, as that term is defined herein.

 

Liquidation. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, payments to the holders of Series A Preferred Stock shall be treated pari passu with the Company’s common stock, except that the payment on each share of Series A Preferred Stock shall be equal to the amount of the payment on each share of the Company’s common stock multiplied by the Conversion Rate, as that term is defined herein.

 

Conversion and Adjustments.

 

Conversion Rate. The Series A Preferred Stock shall be convertible into shares of the Company’s common stock, as follows:

 

Each 1,000 shares of Series A Preferred Stock shall be convertible at any time into a number of shares of the Company’s common stock that equals one percent (1.00%) of the number of issued and outstanding shares of the Company’s common stock outstanding on the date of conversion (the “Conversion Rate”).

 

No Partial Conversion. A holder of shares of Series A Preferred Stock shall be required to convert all of such holder’s shares of Series A Preferred Stock, should any such holder exercise his, her or its rights of conversion.

 

Adjustment for Merger and Reorganization, etc. If there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Company in which the Company’s common stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property, then each share of Series A Preferred Stock shall be deemed to have been converted into shares of the Company’s common stock at the Conversion Rate.

 

Protection Provisions. So long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without first obtaining the unanimous written consent of the holders of Series A Preferred Stock, alter or change the rights, preferences or privileges of the Series A Preferred Stock so as to affect adversely the holders of Series A Preferred Stock.

 

Waiver. Any of the rights, powers or preferences of the holders of the Series A Preferred Stock may be waived by the affirmative consent or vote of the holders of at least a majority of the shares of Series A Preferred Stock then outstanding.

 

No Other Rights or Privileges. Except as specifically set forth herein, the holder(s) of the shares of Series A Preferred Stock shall have no other rights, privileges or preferences with respect to the Series A Preferred Stock.

 

 
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13. NEW MITEXSTREAM AGREEMENT

 

In February 2021, Black Bird entered into a Manufacturing, Sales and Distribution License Agreement (the New MiteXstream Agreement) with a related party, Touchstone Enviro Solutions, Inc., which replaced a prior similar agreement (the Original MiteXstream Agreement) and served to expand Black Bird’s rights with respect to MiteXstream, an EPA-registered biopesticide. The New MiteXstream Agreement contains the following important provisions as compared to the Original MiteXstream Agreement:

 

 

 

New MiteXstream Agreement

 

Original MiteXstream Agreement

Term

 

December 31, 2080

 

Initial terms of 10 years, with one 10-year renewal term

Territory

 

Worldwide Exclusive (1)

 

United States and Canada

Royalty

 

$10.00 per gallon manufactured

 

Effective royalty of an estimated $50 per gallon

Minimums

 

2,500 gallons of concentrate manufactured per year (2)

 

$20,000 of product per year

Sublicensing

 

Right to sublicense granted

 

No right to sublicense

Trademarks

 

For no extra consideration, rights granted to use “MiteXstream” and “Harnessing the Power of Water”

 

For no extra consideration, rights granted to use “MiteXstream”

 

 

 

 

 

 

(1)

(2)

Exclusivity ends and becomes non-exclusive, if the minimum of 2,500 gallons per year is not met.

The minimum (2,500 gallons per year) is deemed to have been satisfied through December 31, 2022.

 

The disinterested Directors of the Company approved the New MiteXstream Agreement.

 

14. ASSET PURCHASE AGREEMENT

 

In December 2020, a newly-formed subsidiary of the Company, Big Sky American Dist., LLC, a Montana limited liability company (“Big Sky American”), which distributes the Company’s Grizzly Creek Naturals CBD and other products, entered into an asset purchase agreement (the “Big Sky APA”), whereby it purchased certain distribution-related assets associated with approximately 200 retail locations in Western Montana for $200,000 in cash, in February 2021. The purchased assets consisted of $10,000 of furniture and equipment and $190,000 of an intangible asset, a customer list, which is being amortized over 18 months.

 

15. INTANGIBLE ASSET

 

The Company has an intangible asset related to the purchase of product distribution assets in the amount of $190,000, which is for a customer list and is being amortized over 18 months. The asset has been fully amortized as of September 30, 2022.

 

16. STOCKHOLDER RECEIVABLE

 

At September 30, 2022 and 2021, cash relating to a stockholder receivable of Black Bird for $1,000, which stockholder receivable became a part of the Company’s outstanding common stock history, upon its acquisition of Black Bird. The stockholder receivable relates to 42,885 shares of Company common stock.

 

17. SUBSEQUENT EVENTS

 

Convertible Promissory Note

 

1800 Diagonal Lending LLC. In November 2022, the Company obtained a loan from 1800 Diagonal Lending LLC which netted the Company $100,000 in proceeds. In consideration of such loan, the Company issued a $103,750 face amount convertible promissory note (“1800 Diagonal Note #2”) bearing interest at 10% per annum, with principal and interest due in November 2023. The Company has the right to repay the 1800 Diagonal Note #2 at a premium ranging from 120% to 125% of the face amount. The 1800 Diagonal Note #2 is convertible into shares of the Company’s common stock at a conversion price equal to 65% multiplied by the average of the two lowest trading prices of the Company’s common stock during the 15 trading days prior to the applicable conversion date, any time after May 7, 2023.

 

Other

 

Management has evaluated subsequent events through November 14, 2022.

 

 
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Effects of COVID-19

 

The COVID-19 pandemic had a discernable short-term negative impact on the ability of our company to obtain capital needed to accelerate the development of our business, as well as to obtain needed inventory, due to supply chain delays. While these limitations have eased, we are unable to predict when such limitations will be entirely resolved.

 

Overall, our company is not of a size that required us to implement “company-wide” policies in response to the COVID-19 pandemic. Further, our product manufacturing operations have experienced no negative consequences attributable to the COVID-19 pandemic, inasmuch as these operations involve a limited number of persons.

 

For purposes of the discussion below, except where otherwise indicated, the descriptions of our business, our strategies, our risk factors and any other forward-looking statements, including regarding us, our business and the market generally, do not reflect the potential impact of the COVID-19 pandemic or our responses thereto.

 

Basis of Presentation

 

This Management’s Discussion and Analysis of Financial Condition and Results of Operations section includes financial results of our company, Black Bird Biotech, Inc., including its subsidiaries, Black Bird Potentials Inc. (BB Potentials), Big Sky American Dist., LLC (Big Sky American) and Black Bird Hemp Manager, LLC, for the nine months ended September 30, 2022 and 2021.

 

Cautionary Statement

 

The following discussion and analysis should be read in conjunction with our financial statements and related notes that appear elsewhere herein.

 

Our actual results may differ materially from those anticipated in the following discussion, as a result of a variety of risks and uncertainties, including those described herein under “Disclosure Regarding Forward-Looking Statements.” We assume no obligation to update any of the forward-looking statements included herein.

 

Implications of Being an Emerging Growth Company

 

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

 

 

·

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

 

·

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);

 

·

submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and

 

·

disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

 

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.

 

We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1.07 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

 

Critical Accounting Policies

 

In General. Our accounting policies are discussed in detail in the footnotes to our financial statements beginning on page F-1. We consider our critical accounting policies related to revenue recognition, inventory and fair value of financial instruments.

 

 
20
 

 

Change in Accounting Principle. In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2020-06-Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging- Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity. The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. The new guidance is effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020. Our company has early-adopted ASU 2020-06 for the year beginning January 1, 2021.

 

Overview and Outlook

 

Through BB Potentials, our company is the exclusive worldwide manufacturer and distributor of MiteXstream, an EPA-registered plant-based biopesticide (EPA Reg. No. 95366-1) effective in the eradication of mites and similar pests, including spider mites, a pest that destroys crops, especially cannabis, hops, coffee, and house plants, as well as molds and mildew. Also through BB Potentials, we manufacture and sell CBD products, including CBD Oils, gummies and pet treats, and CBD-infused personal care products, under the Grizzly Creek Naturals brand name. Big Sky American distributes our Grizzly Creek Naturals products, as well as an array of other consumer retail products, in Western Montana. In addition, for 2020 and 2021, BB Potentials was a licensed grower of industrial hemp under the Montana Hemp Pilot Program and, in connection therewith, established “Black Bird American Hemp” as the brand name under which these efforts were to be conducted. For the foreseeable future, we have suspended our hemp-related efforts.

 

Principal Factors Affecting Our Financial Performance

 

Our future operating results can be expected to be primarily affected by the following factors:

 

 

·

our ability to establish and maintain the value proposition of our MiteXstream biopesticide, vis-a-vis other available pest control products;

 

·

our ability to generate sales channels for MiteXstream; and

 

·

our ability to contain our operating costs.

 

Recent Developments

 

Spire+. In March 2022, our company launched the first major initiative in marketing our MiteXstream biopesticide on a national basis, when we entered into a consulting agreement with Spire+, a Cornelius, North Carolina-based leading sales and marketing agency that specializes in brand building, marketing, communications and business development. Spire+ has begun work to implement a comprehensive go-to-market strategy for MiteXstream, including e-commerce, traditional retail and a category-specific distribution model. Spire+, an affiliate of Spire Sports + Entertainment, LLC, has a long history of building and executing successful sales and marketing programs for brands, such as Toyota, 5-hour ENERGY, Auto-Owners Insurance, ENEOS Motor Oil, Petro-Canada, STP and Parker Hannifin.

 

Sales Executive Officer. Following our executing the agreement with Spire+, in April 2022, we hired William J. LoBell to serve as our Executive Vice President of Sales and Development. In addition to working directly with Spire+ to expand sales of MiteXstream, Mr. LoBell seeks to establish additional sales channels for the biopesticide product.

 

Distribution Agreement. In August 2022, we entered into a distribution agreement with a Chicago-based distributor of spa-quality personal products for our Grizzly Creek NaturalsTM CBD product line.

 

CBD Marketing Program. In August 2022, we announced the establishment of an Affiliate Sales Program for our Grizzly Creek NaturalsTM CBD product line. This program is expected to launch in late November 2022.

 

Results of Operations

 

Nine Months Ended September 30, 2022 (“Interim 2022”) and 2021 (“Interim 2021”). Our purchase of certain distribution-related assets pursuant to the Big Sky APA was made with an expectation that an immediately accessible larger number of retail locations would allow us to increase more quickly sales of our CBD products. Big Sky American, since beginning its consumer product distribution operations in Northwest Montana in April 2021, has had a positive impact on our operating results, when compared to our prior operating results. However, our anticipated increase in sales of our CBD products has not yet occurred. Rather, sales of non-CBD consumer products, in large measure, accounted for the overall increase in our product sales for Interim 2022. During Interim 2022, sales of MiteXstream improved from Interim 2022, but were not significant.

 

 
21
 

 

During Interim 2022, our business operations generated $70,484 (unaudited) in revenues from product sales with a cost of goods sold of $38,984 (unaudited), resulting in a gross profit of $31,500 (unaudited). During Interim 2021, our business operations generated $81,906 (unaudited) in revenues from product sales with a cost of goods sold of $63,239 (unaudited), resulting in a gross profit of $18,667 (unaudited). Our reduced revenues is attributable primarily to a significant reduction in Summer tourism in Western Montana, due to high gasoline prices. However, we had a higher gross profit for Interim 2022, due to higher sales of Mitexstream that carries a greater per-unit margin than other products we sell.

 

During Interim 2022, we incurred operating expenses of $1,105,533 (unaudited), which were comprised of $286,630 (unaudited) in consulting services, $4,358 (unaudited) in website expenses, $12,597 (unaudited) in legal and professional services, $3,600 (unaudited) in rent, $221,800 (unaudited) in advertising and marketing expense, $16,998 (unaudited) in license fee and $559,550 (unaudited) in general and administrative expense, resulting in a net operating loss of $(1,074,033) (unaudited). In addition, we incurred amortization expense of $84,444 (unaudited), interest expense of $255,913 (unaudited) and depreciation expense of $3,355 (unaudited), resulting in a net loss for Interim 2022 of $(1,417,745) (unaudited).

 

During Interim 2021, we incurred operating expenses of $738,632 (unaudited), which were comprised of $241,426 (unaudited) in consulting services $119,650 (unaudited) of which was paid by the issuance of common stock), $11,355 (unaudited) in website expenses, $48,872 (unaudited) in legal and professional services, $24,008 (unaudited) for product license, $8,250 (unaudited) in rent, $5,195 (unaudited) in advertising and marketing expense and $399,256 (unaudited) in general and administrative expense, resulting in a net operating loss of $(719,965) (unaudited). In addition, we incurred amortization expense of $73,889 (unaudited), interest expense of $128,790 (unaudited) and depreciation expense of $3,080 (unaudited), resulting in a net loss for Interim 2021 of $(925,724) (unaudited).

 

We expect that our revenues will increase from quarter to quarter beginning with the first quarter of 2023, as sales of MiteXstream and Grizzly Creek Naturals products are expected to increase from our recently-initiated marketing efforts. There is no assurance that such will be the case, and we expect to incur operating losses through at least June 30, 2023. Further, because of our relative current lack of capital and the current lack of brand name awareness of MiteXstream, we cannot predict the levels of our future revenues.

 

Further, because of our relative current lack of capital and the current lack of brand name awareness of MiteXstream and Grizzly Creek Naturals, we cannot predict the levels of our future revenues. However, our management believes that MiteXstream will become the most dynamic, fastest growing part of our business.

 

Plans for the Next Six Months

 

Substantially all of our available capital, financial and human, will be devoted to increasing sales of MiteXstream. Through our agreement with Spire+, we will implement a comprehensive go-to-market strategy for MiteXstream, including e-commerce, traditional retail and a category-specific distribution model. In addition, our internal efforts will be focused on developing sales channels outside the scope of the Spire+ efforts. There is no assurance that we will be successful in increasing sales of MiteXstream.

 

In August 2022, we entered into a distribution agreement with a Chicago-based distributor of spa-quality personal products for our Grizzly Creek NaturalsTM CBD product line. Also, in August 2022, we announced the establishment of an Affiliate Sales Program for our Grizzly Creek NaturalsTM CBD product line. This program is expected to launch in late November 2022.

 

Financial Condition, Liquidity and Capital Resources

 

September 30, 2022. At September 30, 2022, our company had $66,176 (unaudited) in cash and a working capital deficit of $665,905 (unaudited), compared to $499,766 in cash and working capital of $574,165 at December 31, 2021. The change in our working capital position from December 31, 2021, to September 30, 2022, is attributable primarily our repayment of $200,000 in debt, the payment of significantly increased marketing expenses and the payment of operating expenses.

 

Our company’s current cash position of approximately $120,000 is not adequate for our company to maintain its present level of operations through the first quarter of 2023. We must obtain additional capital from third parties to implement our full business plans. There is no assurance that we will be successful in obtaining such additional capital.

 

Capital Sources. We have derived capital from sales of our common stock and from loans. Our capital sources are described below.

 

Regulation A Offerings. In May 2020, our company filed an Offering Statement on Form 1-A (File No. 054-11215) (the “Reg A #1”) with the SEC with respect to 70,000,000 shares of common stock, as amended, which was qualified by the SEC on August 4, 2020. During the year ended December 31, 2021, we sold a total of 4,875,000 shares of common stock for a total of $195,000 in cash, under the Reg A #1, which expired by its terms on August 4, 2021. At the end of August 2021, our company filed a second Offering Statement on Form 1-A (File No. 024-11621) (the “Reg A #2”) with the SEC with respect to 100,000,000 shares of common stock, as amended, which was qualified by the SEC on September 9, 2021. During the year ended December 31, 2021, we sold a total of 93,033,333 shares of common stock for a total of $1,395,500 in cash, under the Reg A #2.

 

 
22
 

 

Third-Party Loans.

 

Tri-Bridge Ventures LLC. In April 2020, the Company obtained a loan in the amount of $25,000 from Tri-Bridge Ventures LLC. In consideration of such loan, the Company issued a $25,000 face amount convertible promissory note (the “Tri-Bridge Note”) bearing interest at 10% per annum, with principal and interest due in January 2021. Tri-Bridge Note is convertible into shares of the Company’s common stock at the rate of one share for each $.001 of debt converted anytime after August 30, 2020.

 

In May 2022, the Tri-Bridge Note #1 was partially repaid through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

15,146

 

 

$0.001

 

 

 

15,146,188

 

Total Converted: $15,146

 

 

 

 

 

 

Total Shares: 15,146,188

 

 

In July 2022, the Tri-Bridge Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

9,854

 

 

$0.001

 

 

 

9,853,810

 

Total Converted: $9,854

 

 

 

 

 

 

Total Shares: 9,853,810

 

 

At September 30, 2022, and December 31, 2021, accrued interest on the Tri-Bridge Note was $-0- and $4,178, respectively.

 

EMA Financial, LLC. In December 2020, the Company obtained a loan from EMA Financial, LLC which netted us $50,000 in proceeds. In consideration of such loan, the Company issued a $58,600 face amount convertible promissory note (the “EMA Note”), with OID of $4,100, bearing interest at 10% per annum, with principal and interest due in September 2021. The Company had the right to repay the EMA Note at a premium ranging from 120% to 145% of the face amount. The EMA Note was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 60% of the market price of the Company’s common stock on the date of issuance of the EMA Note and the date of conversion, any time after June 15, 2021.

 

In June 2021, the EMA Note was repaid in full in the amount of $93,697.70, as follows: $58,600 in principal; $3,499.30 in interest; and $31,598.40 as a prepayment premium.

 

Power Up Lending Group Ltd. In January 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $52,000 in proceeds. In consideration of such loan, the Company issued a $55,500 face amount convertible promissory note (“Power Up Note #1”) bearing interest at 12% per annum, with principal and interest due in January 2022. The Company had the right to repay the Power Up Note #1 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #1 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #1 and the date of conversion, any time after July 14, 2021.

 

During July 2021, the Power Up Note #1 was repaid in full through conversion into shares of the Company’s common stock, as follows:

 

 

 

 

 

 

 

 

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

15,000

 

 

$0.0162

 

 

 

925,926

 

$

20,000

 

 

$0.0143

 

 

 

1,398,601

 

$

20,500

 

 

$0.0143

 

 

 

1,666,434

 

Total Converted: $55,500

 

 

 

 

 

 

Total Shares: 3,990,961

 

 

SE Holdings, LLC. In February 2021, the Company obtained a loan from SE Holdings LLC which netted the Company $106,000 in proceeds. In consideration of such loan, the Company issued a $121,000 face amount promissory note (the “SE Holdings Note”), with OID of $15,000, bearing interest at 9% per annum, with principal and interest payable in eight equal monthly payments of $15,125 beginning in July 2021. The Company had the right to repay the SE Holdings Note at any time. Should the Company have been in default on SE Holdings Note, the SE Holdings Note would have become convertible into shares of the Company’s common stock at a conversion price equal to the lesser of the lowest closing bid price of the Company’s commons stock for the trading day immediately preceding either (a) the delivery of a notice of default, (b) the delivery of a notice of conversion resulting from such default or (c) the issue date of the SE Holdings Note. In addition, the Company issued 2,000,000 shares of its common stock to SE Holdings as a commitment fee, which shares were valued at $0.065 with a 50% discount per share, or $65,000, in the aggregate.

 

 
23
 

 

Through September 2021, the Company had repaid $45,375 of the SE Holdings Note, in accordance with the terms of the SE Holdings Note. In October 2021, the remaining balance of the SE Holdings Note, $75,625, was repaid by the Company.

 

Power Up Lending Group Ltd. In February 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $43,500 in proceeds. In consideration of such loan, the Company issued a $43,500 face amount convertible promissory note (“Power Up Note #2”) bearing interest at 12% per annum, with principal and interest due in January 2022. The Company had the right to repay the Power Up Note #2 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #2 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #2 and the date of conversion, any time after August 17, 2021.

 

During August and September 2021, the Power Up Note #2 was repaid in full through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

15,000

 

 

$0.0137

 

 

 

1,094,891

 

$

20,000

 

 

$0.0093

 

 

 

2,150,538

 

$

11,110

*

 

$0.0081

 

 

 

1,371,605

 

Total Converted: 46,110

 

 

 

 

 

 

Total Shares: 4,617,034

 

* This amount includes $2,610 of interest.

 

Power Up Lending Group Ltd. In April 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $68,750 in proceeds. In consideration of such loan, the Company issued a $68,750 face amount convertible promissory note (“Power Up Note #3”) bearing interest at 12% per annum, with principal and interest due in April 2022. The Company had the right to repay the Power Up Note #3 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #3 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #3 and the date of conversion, any time after October 22, 2021.

 

In September 2021, the Power Up Note #3 was repaid in full by the Company, as follows: $68,750.00 in principal, $27,500.00 in additional principal as a prepayment premium and $5,063.01 in interest, a total repayment amount of $101,313.01.

 

Power Up Lending Group Ltd. In August 2021, the Company obtained a loan from Power Up Lending Group Ltd. which netted the Company $78,750 in proceeds. In consideration of such loan, the Company issued a $78,750 face amount convertible promissory note (“Power Up Note #4”) bearing interest at 12% per annum, with principal and interest due in August 2022. The Company had the right to repay the Power Up Note #4 at a premium ranging from 125% to 145% of the face amount. The Power Up Note #4 was convertible into shares of the Company’s common stock at a conversion price equal to the lower of 61% of the market price of the Company’s common stock on the date of issuance of the Power Up Note #4 and the date of conversion, any time after October 22, 2021.

 

In September 2021, the Power Up Note #4 was repaid in full by the Company, as follows: $78,750.00 in principal, $15,750.00 in additional principal as a prepayment premium and $5,393.84 in interest, a total repayment amount of $99,893.84.

 

FirstFire Global Opportunities Fund LLC. In September 2021, the Company obtained a loan from FirstFire Global Opportunities Fund LLC which netted the Company $125,000 in proceeds. In consideration of such loan, the Company issued a $250,000 face amount convertible promissory note (“FirstFire Note”), with OID of $125,000, due in September 2022. The Company had the right to repay the FirstFire Note at anytime, with a 20%, or $50,000, reduction in principal owed if repaid in full on or before November 30, 2021. The FirstFire Note was convertible into shares of the Company’s common stock at a conversion price equal to $.015 per share, any time after December 1, 2021.

 

Prior to November 30, 2021, the FirstFire Note was repaid in full by the Company, in the amount of $200,000 (which included a $50,000 reduction in principal owed, due to the FirstFire Note’s being repaid in full on or before November 30, 2021).

 

Tiger Trout Capital Puerto Rico, LLC. In September 2021, the Company obtained a loan from Tiger Trout Capital Puerto Rico, LLC which netted the Company $250,000 in proceeds. In consideration of such loan, the Company issued a $500,000 face amount convertible promissory note (“Tiger Trout Note”), with OID of $250,000, with principal due in September 2022. The Company has the right to repay the Tiger Trout Note at anytime, with a 10%, or $50,000, reduction in principal owed if repaid in full on or before November 30, 2021. The Tiger Trout Note is convertible into shares of the Company’s common stock at a conversion price equal to $.015 per share, any time after December 1, 2021.

 

During the nine months ended September 30, 2022, the Company repaid in full the remaining $200,000 balance of the Tiger Trout Note.

 

 
24
 

 

1800 Diagonal Lending LLC. In March 2022, the Company obtained a loan from Sixth Street Lending LLC, who later assigned the loan to an affiliated company, 1800 Diagonal Lending LLC, which netted the Company $200,000 in proceeds. In consideration of such loan, the Company issued a $228,200 face amount promissory note (the “1800 Diagonal Note #1”), with OID of $24,450 and a one-time interest charge of $25,102, with principal and interest payable in 10 equal monthly payments of $25,330.20 beginning in May 2022. The Company has the right to repay the 1800 Diagonal Note #1 at any time, without penalty. Should the Company become in default on the 1800 Diagonal Note #1, the 1800 Diagonal Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 75% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date.

 

As of September 30, 2022, the Company was current in its repayment obligations under the 1800 Diagonal Note #1 and the 1800 Diagonal Note #1 had a remaining balance of $126,651 at September 30, 2022.

 

Talos Victory Fund, LLC. In May 2002, the Company obtained a loan from Talos Victory Fund, LLC which netted the Company $107,780 in proceeds. In consideration of such loan, the Company issued a $135,000 face amount promissory note (the “Talos Note #1”), with OID of $13,500, commissions of $9,720 and legal fees of $4,000. The Talos Note #1 is due in May 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $.005 per share, subject to a 4.99% equity blocker. In connection with the Talos Note #1, we issued to Talos Victory Fund 7,593,750 cashless warrants with an exercise price of $.008 per share. Additionally, we issued 1,215,000 cashless warrants with an exercise price of $0.008 per share to J.H. Darbie & Co. (“Darbie”), as a placement agent fee, in connection with the Talos Note #1.

 

In August 2022, $7,000 in accrued interest on the Talos Note #1 was repaid through conversion into shares of the Company’s common stock, as follows:

 

Amount Converted

 

 

Conversion Price Per Share

 

 

Number Shares

 

$

7,000

 

 

$0.001

 

 

 

7,000,000

 

Total Converted: $7,000

 

 

 

 

 

 

Total Shares: 7,000,000

 

 

At September 30, 2022, the Talos Note #1 had a remaining balance of $135,000.

 

Mast Hill Fund, L.P. In May 2022, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $200,000 in proceeds. In consideration of such loan, the Company issued a $250,000 face amount promissory note (the “Mast Hill Note #1”), with OID of $25,000, commissions of $18,000 and legal fees of $7,000. The Mast Hill Note #1 is due in May 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $.005 per share, subject to a 4.99% equity blocker. In connection with the Mast Hill Note #1, we issued to Mast Hill Fund 14,062,500 cashless warrants with an exercise price of $.008 per share. Additionally, we issued 2,250,000 cashless warrants with an exercise price of $0.008 per share to Darbie, as a placement agent fee, in connection with the Mast Hill Note #1.

 

At September 30, 2022, the Mast Hill Note #1 had a remaining balance of $250,000.

 

GS Capital Partners, LLC. In June 2022, we obtained a loan from GS Capital Partners, LLC which netted our company $63,650 in proceeds. In consideration of such loan, we issued a $70,000 face amount promissory note (the “GS Capital Note #1”), with OID of $6,500, a finder’s fee of $4,900 and legal fees of $3,000, with principal and interest payable in 10 equal monthly payments of $7,840 beginning in September 2022. The Company has the right to repay the GS Capital Note #1 at any time, without penalty. Should the Company become in default on the GS Capital Note #1, the GS Capital Note #1 becomes convertible into shares of the Company’s common stock at a conversion price equal to 70% multiplied by the lowest trading price of the Company’s common stock during the 10 trading days prior to the applicable conversion date. In connection with the GS Capital Note #1, we issued to GS Capital 4,000,000 cashless warrants with an exercise price of $.008 per share.

 

As of September 30, 2022, the Company was current in its repayment obligations under the GS Capital Note #1 and the GS Capital Note #1 had a remaining balance of $70,560 at September 30, 2022.

 

Boot Capital, LLC. In August 2022, the Company obtained a loan from Boot Capital, LLC which netted the Company $56,000 in proceeds. In consideration of such loan, the Company issued a $61,600 face amount promissory note (the “Boot Capital Note #1”), with OID of $5,600, commissions of $3,360 and legal fees of $2,500. The Boot Capital Note #1 is due in August 2023 and is convertible into shares of the Company’s common stock at any time after 180 days of issuance at a conversion price at a 40% discount to the then-market price of the Company’s common stock, subject to a 4.99% equity blocker.

 

At September 30, 2022, the Boot Capital Note #1 had a remaining balance of $61,600.

 

 
25
 

 

 Mast Hill Fund, L.P. In September 2022, the Company obtained a loan from Mast Hill Fund, L.P. which netted the Company $130,500 in proceeds. In consideration of such loan, the Company issued a $145,000 face amount senior secured promissory note (the “Mast Hill Note #2”), with OID of $14,500, commissions of $10,440 and legal fees of $3,000. The Mast Hill Note #2 is due in September 2023 and is convertible into shares of the Company’s common stock at any time at a conversion price of $.0025 per share, subject to a 4.99% equity blocker. In connection with the Mast Hill Note #2, we issued to Mast Hill 40,000,000 cashless warrants with an exercise price of $.0055 per share. Additionally, we issued 2,130,613 cashless warrants with an exercise price of $0.0049 per share to Darbie, as a placement agent fee, in connection with the Mast Hill Note #2.

 

At September 30, 2022, the Mast Hill Note #2 had a remaining balance of $145,000.

 

1800 Diagonal Lending LLC. Subsequent to September 30, 2022, in November 2022, the Company obtained a loan from 1800 Diagonal Lending LLC which netted the Company $100,000 in proceeds. In consideration of such loan, the Company issued a $103,750 face amount convertible promissory note (“1800 Diagonal Note #2”) bearing interest at 10% per annum, with principal and interest due in November 2023. The Company has the right to repay the 1800 Diagonal Note #2 at a premium ranging from 120% to 125% of the face amount. The 1800 Diagonal Note #2 is convertible into shares of the Company’s common stock at a conversion price equal to 65% multiplied by the average of the two lowest trading prices of the Company’s common stock during the 15 trading days prior to the applicable conversion date, any time after May 7, 2023.

 

Related-Party Advances. During the nine months ended September 30, 2022, we obtained $70,500 in advances from Touchstone Enviro Solutions, Inc. (“Touchstone”), a company owned by three of our company’s officers and directors, Fabian G. Deneault, L. A. Newlan, Jr. and Eric Newlan. The funds were used to make payment on the 1800 Diagonal Note #1 and for working capital. Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2022, we owed Touchstone $70,500.

 

Also during the nine months ended September 30, 2022, we obtained an advance from our President, Fabian G. Deneault, in the amount of $10,000. The funds were used for marketing expenses. Such funds were obtained as a loan on open account, accrue no interest and are due on demand. At September 30, 2022, we owed Mr. Deneault $10,000.

 

Inflation

 

Current economic conditions include significant inflationary pressures, particularly within the supply chain, are expected to negatively impact our operating results through increased raw materials and shipping costs. However, no prediction can be made in this regard and, further, no prediction can be made with respect to how this inflation will affect our future results of operations.

 

Seasonality

 

Our Big Sky American operations are subject to seasonal fluctuation, with the months of May through September providing approximately 70% of Big Sky American’s sales revenues. We expect that our operating results with respect to MiteXstream will be impacted, in an indeterminate measure, by the seasonality of farming operations, including cannabis grow operations. However, we are currently unable to predict the level to which such seasonality will impact our MiteXstream business.

 

Off Balance Sheet Arrangements

 

As of September 30, 2022, there were no off-balance sheet arrangements.

 

Contractual Obligations

 

In May 2020, BB Potentials entered into a facility lease with Grizzly Creek Farms, LLC, an entity owned by one our Directors, Fabian G. Deneault, with respect to approximately 2,000 square feet of manufacturing space located in Ronan, Montana. Monthly rent under such lease was $1,500 and the initial term of such lease expired in December 2025. This lease was terminated effective April 1, 2021. Since such date, Mr. Deneault permits BB Potentials to utilize the previously-leased facility for storage, at no charge.

 

Our sole operating lease relates to our corporate office, the term of which is month-to-month. Monthly rent for this space is $600.

 

Capital Expenditures

 

We made no capital expenditures during the nine months ended September 30, 2022. We made capital expenditures of $185,702 during the year ended December 31, 2021, which included the purchase of distribution assets used by Big Sky American and the purchase of other distribution-related assets. Without obtaining additional capital, we will not be able to make any capital expenditures.

 

 
26
 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures. Management is responsible for establishing and maintaining adequate disclosure controls and procedures that are designed to ensure that information required to be disclosed by the Company in its reports filed pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely and reliable financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America.

 

As of the quarter ended September 30, 2022, our principal executive officer and principal financial officer completed an assessment of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e), to determine the existence of any material weaknesses or significant deficiencies under the Exchange Act. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the Company's financial reporting.

 

Based on that evaluation, we concluded that our disclosure controls and procedures over financial reporting were not effective as of September 30, 2022.

 

Changes in Internal Control Over Financial Reporting. There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
27
 

 

PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We have no pending legal or administrative proceedings.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

                During the three months ended September 30, 2022, we issued securities that have not been reported previously, as follows:

 

In August 2022, we issued 5,062,500 shares of common stock to Talos Fund, LLC upon the exercise of warrants. The exercise of these warrants was on a cashless basis. These shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

 

In August 2022, we issued 9,375,000 shares of common stock to Mast Hill Fund, L.P. upon the exercise of warrants. The exercise of these warrants was on a cashless basis. These shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

 

In August 2022, we issued 7,000,000 shares of common stock to Talos Fund, LLC for a conversion of $7,000 in convertible debt. These shares were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

 

In September 2022, we issued $145,000 face amount senior secured promissory note to Mast Hill Fund, L.P. This note is due in September 2023 and is convertible into shares of our common stock at any time at a conversion price of $.0025 per share, subject to a 4.99% equity blocker. This note was issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

 

In September 2022, we issued to Mast Hill Fund L.P. 40,000,000 cashless warrants with an exercise price of $0.0055 per share, and a term of five years. These warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

 

In September 2022, we issued to J.H. Darbie & Co. 2,130,613 cashless warrants with an exercise price of $0.0049 per share, and a term of five years. These warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

 

                Subsequent to September 30, 2022, we have issue securities that have not been reported previously, as follows:

 

In November 2022, we issued $103,750 face amount promissory note to 1800 Diagonal Lending LLC. This note is due in November 2023 and is convertible into shares of our common stock at a conversion price equal to 65% multiplied by the average of the two lowest trading prices of the Company’s common stock during the 15 trading days prior to the applicable conversion date, any time after May 7, 2023. This note was issued in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, as there was no general solicitation, and the transaction did not involve a public offering.

 

Item 3. Defaults Upon Senior Securities

 

                None.

 

Item 4. Mine Safety Disclosures

 

                Not applicable.

 

Item 5. Other Information

 

                None.

 

 
28
 

 

Item 6. Exhibits

 

Exhibit

Description

10.1*

Securities Purchase Agreement between Registrant and Mast Hill Fund, L.P.

10.2*

Security Agreement between Registrant and Mast Hill Fund, L.P.

10.3*

Securities Purchase Agreement between Registrant and 1800 Diagonal Lending LLC

10.4*

Senior Secured Promissory Note, principal amount $145,000, in favor of Mast Hill Fund, L.P.

10.5*

Convertible Promissory Note, principal amount $103,750, in favor of 1800 Diagonal Lending LLC

10.6*

Warrant issued to Mast Hill Fund, L.P.

10.7*

Warrant issued to J.H. Darbie & Co.

31.1*

Certification by Registrant’s Chief Executive Officer with respect to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022

31.2*

Certification by Registrant’s Chief Financial Officer with respect to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022

32.1*

Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code by Registrant’s Chief Executive Officer and Chief Financial Officer with respect to Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2022

101.*

INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH*

Inline XBRL Taxonomy Extension Schema Document.

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*

Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104*

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

_______________________

* Filed herewith.

 

 
29
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 BLACK BIRD BIOTECH, INC.
    
Dated: November 14, 2022By:/s/ Fabian G. Deneault

 

 

Fabian G. Deneault 
  President (Principal Executive Officer) 

 

 
30

 

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